WEST DOVER — Vermont Natural Resources Board officials are giving Mount Snow an extra year to finish a snow-making upgrade fueled by $30 million in EB-5 foreign investment.
The West Lake Water Project's completion-deadline extension to October 2018 is further fallout from Mount Snow's long wait for federal approval of its EB-5 money.
Resort administrators still hope to have the project - which will give Mount Snow six times its current snow-making capacity - done before next winter. But that schedule apparently is not a sure thing due to last year's EB-5 delays.
“While it is anticipated that the system will be completed and operational in time for the 2017-18 ski season, variables such as weather that delays construction, or testing of the system that reveals unanticipated failures, or low streamflows in fall 2017, mean there is no guarantee that West Lake will be ready and available to make snow for the 2017-18 season,” administrators wrote in their Act 250 extension application to the Natural Resources Board.
The federal EB-5 program allows foreigners to obtain visas and permanent United States residency by investing in job-creating projects.
But the program has come under scrutiny in Vermont due to allegations of a $200 million EB-5 fraud at Jay Peak Resort brought by the U.S. Securities and Exchange Commission and the Vermont Department of Financial Regulation.
There also have been repercussions for the state-run Vermont EB-5 Regional Center. At one point, federal officials threatened to shut down the state's center due to questions about oversight of the Jay Peak projects.
Mount Snow has no connection to Jay Peak's problems. But resort administrators have speculated that their initial $52 million EB-5 offering, earmarked for West Lake and a new Carinthia ski lodge, was hampered by the Jay Peak mess.
The resort received permission to access its escrowed EB-5 money in December 2016. But that was a full 18 months later than Mount Snow had been expecting, according to the resort's recent West Lake-related filing with the state Natural Resources Board.
That document - filed March 22 by Laurie Newton, Mount Snow development vice president, and Dick Deutsch, Mount Snow Ltd. president - offers further details about the resort's EB-5 wait and its financial effects.
West Lake construction started in February 2015, and Mount Snow administrators knew that they couldn't access escrowed EB-5 money until their first investor's visa application was approved by U.S. Citizenship and Immigration Services.
That investor had submitted his petition in spring 2014. “At the time, USCIS processing times averaged 13 months, so Mount Snow reasonably anticipated the release of funds in approximately June of 2015,” Newton and Deutsch wrote.
That didn't happen. Nevertheless, work continued on the West Lake Water Project into early winter 2016.
By April 2016, Mount Snow had spent about $15 million of its own money on the project. “That cash outlay, coupled with one of the worst ski seasons in the last 30 years, meant that Mount Snow could not continue work on the West Lake project until the funds in escrow were released,” administrators wrote.
Around that same time, news of the Jay Peak EB-5 allegations broke.
“Although completely unrelated to Mount Snow and obviously out of Mount Snow's control, we believe that this caused USCIS to take a closer look at all Vermont EB-5 projects, despite no allegations of any improprieties at Mount Snow,” Newton and Deutsch wrote.
The resulting delay pushed West Lake and Carinthia further off schedule and also caused headaches for Mount Snow parent company Peak Resorts, which engineered a $20 million stock sale in part to alleviate EB-5 financial pressures.
The December release of the EB-5 money - coupled with a much stronger 2016-17 ski season - have led to renewed optimism at Mount Snow.
But the resort's request for an Act 250 permitting extension for West Lake shows that administrators haven't entirely been able to make up for lost EB-5 time.
West Lake's Act 250 construction-completion deadline had been Oct. 15 of this year. The Natural Resources Board quickly granted Mount Snow's proposed extension to Oct. 15, 2018, issuing a ruling just nine days after receiving the resort's application.
Finishing West Lake is key to Peak's plans to draw more visitors to Mount Snow. In a February presentation to investors, Deutsch said the 120 million gallon West Lake “will give us not only increased holding capacity, but it will also give us increased pumping capacity.”
That could allow the resort to open more ski areas earlier in the season, he said.
During that same presentation, Deutsch touted the planned 36,000-square-foot Carinthia Lodge and outlined proposals for future EB-5 offerings to fund hundreds of new ski-in, ski-out housing units. He also disclosed Mount Snow's plans to start its own EB-5 regional center for those projects in order to be free of state control.
But he left no doubt that West Lake is a top priority. “The West Lake Water Project is really a very, very important part of the infrastructure at Mount Snow,” Deutsch said.